Interior secretary held in contempt for trust fund mess

By Raya Widenoja

September 17, 2002

A federal judge on Tuesday held Interior Secretary Gale Norton in contempt of court for failing to reform the agency's Indian trust fund system.

U.S. District Court Judge Royce Lamberth held Norton and Assistant Secretary of Indian Affairs Neal McCaleb in contempt, ordering them to pay legal fees for the plaintiffs and the cost of appointing a court monitor to oversee future reforms of the accounting system. Lamberth accused the two officials of delaying reforms and misleading the court about progress on a plan to fix accounting errors and security problems with online trust information. Lamberth's decision about whether to hold Norton and McCaleb in contempt has been pending since February.

"The recalcitrance exhibited by the Department of Interior in complying with the orders of this court is only surpassed by the incompetence that the agency has show in administering the IIM [Individual Indian Money] trust," Lamberth wrote in his 267-page ruling.

Interior's Bureau of Indian Affairs is responsible for sending checks to Indian trust beneficiaries who rely on trust funds for basic living necessities. Currently, the BIA manages about 1,400 tribal accounts and 300,000 individual trust accounts, which were set up more than a century ago to compensate Indians for the use of their land. Allegations of mismanagement of the BIA trust accounting system culminated in a 1996 lawsuit filed against Interior by Elouise Cobell, founder and current chair of the Blackfeet National Bank.

In February 1999, Lamberth held then-Secretary of the Interior Bruce Babbitt; his assistant secretary for Indian affairs, Kevin Gover; and former Treasury Secretary Robert Rubin in contempt of court for failing to produce records relating to the Cobell case.

In his Sept. 17 decision, Lamberth also declined Cobell's request for a court-appointed receiver to manage reform efforts, which would take responsibility for the needed reforms away from the agency. Lamberth ordered Norton and McCaleb to present plans to bring the department into compliance with court orders by Jan. 6, and set the date for the next phase of the trial for May 2003.

The Interior and Justice departments issued a joint statement criticizing the ruling. "We disagree with the court's decision and are evaluating it to consider all of the options for appeal," said Robert McCallum Jr., assistant attorney general in Justice's Civil Division.

"This administration has done more to fix a very broken trust management system than any previous administration in history," the statement said. The statement also argued that portions of Lamberth's ruling are based on actions taken by officials in the previous administration.